How The Wire Act Opinion Will Affect US Online Poker

The US Department of Justice’s Office of Legal Counsel issued an opinion on Monday about the applicability of the Wire Act to interstate gambling, including online poker. In the short-term, it is unclear that the opinion will change very much about playing poker through the internet.

The DOJ’s announcement serves as a reversal of its 2011 opinion on the matter. In that proclamation, the government concluded that the Wire Act only pertains to sports betting. For those unfamiliar, the Wire Act prohibits use of electronic equipment to place interstate wagers.

While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling.

How is this not a total disaster for online poker?

Granted, the language of the opinion seems pretty damning. There’s no doubt that it represents an expansion of scope for the Wire Act.

For that reason, it came as little shock to industry observers that anti-gambling advocates were crowing about the opinion. Notably, the Coalition to Stop Internet Gambling, which is rumored to enjoy financial backing from Las Vegas Sands ChairmanSheldon Adelson, issued a statement in support of the opinion roughly an hour after its release.

However, now is not the time to lose one’s head. There are several reasons that this decision won’t be cut-and-dried in its enforcement.

The conflict between the branches of government

The first reason that this opinion won’t be the end of the argument is that the DOJ’s proclamation goes against rulings in several federal courts. According to Legal Sports Report, both the 1st and 5th Circuit Courts of Appeal have judgments that define the Wire Act as applicable to sports betting only.

Yesterday’s opinion even acknowledges the discrepancy. It allows for the fact that judicial review might serve as a “one-way check” on the government body’s interpretation.

The DOJ’s powers relate to enforcement only

Another thing to keep in mind is that yesterday’s opinion, though troubling, does not carry the force of law. The Department of Justice is an enforcement agency. It can only execute its duties based upon its interpretation of existing law.

The DOJ might also choose to place enforcement of the new opinion low on its priority list. So, online gambling might end up in the same position as recreational marijuana usage, which remains effectively legal through the DOJ’s assessment of its main priorities.

Lawsuits are all but assured

Finally, DOJ enforcement officials might be loath to begin actions on this opinion because of the likelihood of litigation over it. Lawsuits could tie up any kind of enforcement for years to come.

Given the success states found in their arguments against PASPA, they might be emboldened to take on Uncle Sam once again. Although online poker itself is not a gigantic moneymaker, online gambling itself certainly is.

What could be affected, though?

Despite the likelihood of challenges, however, there’s no denying that the opinion will broaden the effect of the Wire Act on online gambling. In fact, it’s possible that even intrastate online gambling might be affected.

Even though the two points of transmission might be inside a single state, the information might travel out of state in order to reach its destination. As a result, the DOJ might consider it to be an interstate transaction.

Naturally, the decision might affect the tri-state poker compact between New Jersey, Delaware and Nevada. So, sharing of player pools is certainly at risk.

Another surprising aspect of online poker that might be affected is payment processing. The DOJ’s opinion mentions the Unlawful Internet Gambling Enforcement Act as not having altered the Wire Act’s scope, which likely means that the two acts (Wire and UIGEA) are supposed to dovetail with one another.

With that in mind, it’s possible that more banks and payment processors might decide to stop processing payments from online poker sites. It’s a loss in revenue, but they are perfectly within their rights to conclude that it’s not worth the hassle.